Roberts v Goodwin Street Developments Pty Ltd

Background Daniel Roberts, the appellant, is a builder who operated through a company, DSD Builders Pty Ltd, which is now in liquidation. DSD was engaged by Goodwin Street Developments Pty Ltd (the respondent) under a building contract entered into on 10 July 2017 for the construction of student accommodation in Jesmond, NSW (the Contract), on land owned by the respondent (the Property). Work was well advanced when the parties fell out, DSD did no further work on the site after 2 March 2018. The appellant then entered onto the Property and damaged the buildings and removed fixtures including doors, windows and stairs. On 19 March 2018, this damage was discovered by the respondent, which immediately terminated the Contract. The respondent brought two claims against the appellant: first, that the appellant was liable in tort for deliberately causing damage to the Property; and second, that the appellant owed a statutory duty of care under s 37 of the Design and Building Practitioners Act 2020 (NSW) (DBP Act) and was liable for a separate list of defects in the construction work. There was no dispute between the parties as to the costs to repair the damage under each claim. As regards the first claim, the trial judge accepted that a trespass claim could not be made out as at the time of the damage, the respondent did not have exclusive possession of the Property. However, the respondent was successful in its alternative claim, which had not expressly been pleaded in terms, namely, that the tort could be characterised as an action on the case for injury to its interest in the reversion. On that basis, the primary judge upheld the claim for rectification costs. The respondent was also successful at trial in its second claim under s 37 of the DBP Act. On appeal, in respect of the first claim the appellant contended that the primary judge had: (1) denied the appellant procedural fairness by permitting the respondent during the hearing to recharacterise its claim in trespass as an action on the case (Ground 1) and (2) erred in measuring the damages for the tort claim on the basis of the cost to repair the damage, rather than the diminution in the value to the reversionary interest (Ground 2). It was accepted by the appellant that Ground 1 would fail if Ground 2 was not made out. In relation to the second claim, the appellant contended that the trial judge had wrongly construed the DBP Act finding that it applied to boarding houses, being the category of building in question (Ground 3).

The Court (Kirk JA and Griffiths AJA, Ward P dissenting on Grounds 1 and 2, but agreeing on Ground 3) dismissed the appeal, and held as follows:

As to Ground (1):

1. The appellant's concession that this ground could not succeed if Ground 2 was not made out - which it is not - should be accepted: [157] (Kirk JA and Griffiths AJA).
2. In any case, attaching a different legal label to the respondent's claim did not alter the fact that the type of damages claimed was open to be claimed by it based upon the material facts outlined in its List Statement, and did not alter in any significant respect the nature of the claim made for rectification damages. It had been open to the appellant to apply for an adjournment if he could make out some prejudice, but no such application was made: [175]-[177] (Kirk JA and Griffiths AJA). Rodrigues v Ufton (1894) 20 VLR 539, considered.
3. To decide a case on a different basis than what the pleadings have stated would be a denial of procedural fairness: [66], [74] (Ward P, dissenting).

As to Ground 2:

1. Assessing damages in both tort and contract must remain flexible, because the award of damages is based on the circumstances of each case. Nevertheless, in certain types of case particular approaches to the assessment of damages have become accepted as to how the compensatory principle is to be given effect: [91]-[96], [120] (Kirk JA and Griffiths AJA). Arthur Robinson (Grafton) Pty Ltd v Carter [1968] HCA 9, (1968) 122 CLR 649; Chulcough v Holley [1968] ALR 274, (1968) 41 ALJR 336; Sharman v Evans [1977] HCA 8, (1977) 138 CLR 563; Evans v Balog [1976] 1 NSWLR 36; Gagner Pty Ltd (t/as Indochine Cafe) v Canturi Corporation Pty Ltd [2009 NSWCA 413, (2009) ALR 691; Port Stephens Shire Council v Tellamist Pty Ltd [2004] NSWCA 353, (2004) 136 LGERA 98, considered.
2. As in a contract claim, the prima facie approach to assessing damages for tortious damage to property when the owner has possession of the property, or soon will resume possession of the property, is by reference to the costs of repairing the damage to the property or the diminution in value to the property. The former is not merely a proxy of the latter. If the wrongdoer seeks to challenge the reasonableness of the aggrieved party's election between these measures, it bears the evidentiary burden of establishing unreasonableness: [97]-[115], [119]. In this case, the evidentiary burden lay with the appellant, as the party challenging the assessment of damages on the basis of rectification costs: [146]-[147], [151] (Kirk JA and Griffiths AJA). Joyner v Weeks [1891] 2 QB 31; Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (2008) 166 FCR 494, [2008] FCAFC 38, considered. Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272, [2009] HCA 8; Gagner Pty Ltd (t/as Indochine Cafe) v Canturi Corporation Pty Ltd [2009] NSWCA 413, (2009) 262 ALR 691; Evans v Balog [1976] 1 NSWLR 36; Minter v Eacott (1952) 69 WN (NSW) 93, followed. Abbahall Ltd v Smee [2003] 1 WLR 1472; Moss v Christchurch Rural District Council [1925] 2 KB 750; Cotterill v Hobby (1825) 107 ER 1133, 4 B & C 465; Jones v Llanrwst Urban District Council [1911] 1 Ch 393; Hanson v Newman [1934] 1 Ch 298, distinguished.
3. The appellant failed to discharge his evidentiary burden. If he wished to contest the respondent's election, he needed to take appropriate steps. This may have included raising the issue in his Technology and Construction List Response, adducing evidence in support of his position (if appropriate) and/or raising the matter in his written submissions below. He failed to take any of these steps: [147]-[151] (Kirk JA and Griffiths AJA).

As to Ground 3:

1. The primary judge's conclusion that s 37 of the DBP Act applied as regards boarding houses was correct, albeit that the Court adopted different reasoning to his Honour.
2. The general definition of "building work" in s 4(1) of the DBP Act does apply to the further definition of "building work" in s 36(1), but only as regards the first topic addressed in the general definition (identifying the type of work undertaken), with the second topic (identifying what type of buildings that work is undertaken on) instead being addressed by the definition of "building" in s 36(1). A boarding house falls within the definition of "building" in the Environmental Planning and Assessment Act 1979 (NSW), thereby falling within s 36 of the DBP Act. Section 37 of the Act thus applied here: [230]-[232] (Kirk JA and Griffiths AJA, Ward P agreeing at [79]).

JUDGMENT

1. WARD P: This is an appeal from a decision of Stevenson J in the Technology & Construction List of the Equity Division (Goodwin Street Developments Pty Ltd atf Jesmond Unit Trust v DSD Builders Pty Ltd (in liq) [2022] NSWSC 624), in which his Honour found the appellant, Daniel Roberts, liable to the respondent, Goodwin Street Developments Pty Ltd, for damages on what is known as an action on the case (or trespass) for damage to the reversionary interest of the respondent in property located at Jesmond in Newcastle; and quantified the damage to the reversionary interest on the basis of the cost of rectification (rather than diminution in value to the reversionary interest). The primary judge separately and in addition thereto found the appellant liable for damages for breach of a statutory duty of care in relation to construction work carried out on the property.

Background

1. The appellant is the husband of the sole director of a building company, DSD Builders Pty Ltd (DSD), which is now in liquidation. On 10 July 2017, DSD entered into a building contract with the respondent for the construction of student accommodation (three residential boarding houses) at a site owned by the respondent in Jesmond, NSW (the Property), close to the campus of the University of Newcastle (see at [1]-[3] of the primary judgment).
2. The primary judge found (and this finding is not challenged by the appellant) that the appellant, although not a director of DSD, introduced himself as "the builder" in relation to the project; attended every site meeting at the Property between August 2017 and February 2018; and supervised the work performed at the Property (see at [133]-[137] of the primary judgment). At the time that the works commenced on site in July 2017, DSD had employed a licensed supervisor at the site (Mr Johnstone) but he left the employ of DSD about a month after works commenced and was not replaced.
3. In early 2018, there was a dispute between the respondent and DSD as to alleged defective building works and the progress of the works. On 2 March 2018, there was a site meeting between Mr Roberts, directors of the respondent and persons claiming to represent creditors of Mr Roberts, at which demands and threats were made by the creditors' representatives as to money allegedly owing to their clients. Later that day, the respondent issued a notice to DSD under the building contract requiring DSD to remedy defaults in respect of defective works within ten working days (see at [8] of the primary judgment). The notice indicated that if the defaults were not so remedied the respondent might terminate the building contract.
4. It does not appear that there was any attempt to remedy the alleged defects. Indeed, DSD did no further work at the site after 2 March 2018.
5. The primary judge found (and again this finding is not challenged) that between 2 March 2018 and 19 March 2018, the appellant entered onto the Property and maliciously damaged the buildings there being constructed, including by making saw cuts through structural floor beams and wall structures; drilling holes in the valleys of gutters, walls, water and sewer pipes; rendering power cables unserviceable; pouring concrete into sewer pipes; making holes in internal wall sheeting, external cladding and ceilings; and removing fixtures such as doors, windows, stairs and skylights which had previously been installed there (see at [23]-[24]; [89]-[91] of the primary judgment).

Proceedings

1. Proceedings were commenced by the respondent in August 2018 against DSD. In April 2019, the appellant was joined as the second defendant to the proceedings (see the primary judgment at [12]).
2. In early 2021, DSD was the subject of a winding up order in insolvency and a liquidator was appointed to the company. The proceedings against DSD were stayed by operation of s 471B of the Corporations Act 2001 (Cth) (see at [13] of the primary judgment). What then remained were the claims against the appellant.
3. As set out in the second further amended technology and construction list statement, the claims made against the appellant were: first, for damages for negligence pursuant to the extended statutory duty of care in Pt 4 of the Design and Building Practitioners Act 2020 (NSW) (the DBP Act) (see at [36]-[40] of the second further amended construction list statement); and, second, for damages in trespass and conversion to the building works while the builder (DSD) was in possession of the building site (see at [41]-[45] of the second further amended technology and construction list statement). The respondent claimed around $300,000 for the cost of rectifying the defective works and around $586,000 for the cost of making good the damage caused to the site in March 2018 (see at [16] of the primary judgment).
4. The appellant did not give evidence at the hearing and did not call any expert witness or other evidence in relation to the quantum of the respondent's loss. The respondent adduced evidence, including expert evidence as to the existence and cost of repair of the property damage and the existence and cost of repair of the defective works (none of which was challenged by the appellant).
5. The claim in conversion was not able to be maintained (and was abandoned at the hearing), as the respondent was not in possession of the Property at the relevant time (possession being the gist of an action in conversion). The primary judge found that DSD was contractually entitled to possession of the site until the building contract was terminated on 19 March 2018 and therefore as at the time the damage was done to the site, the respondent was not entitled to exclusive possession of the site (see at [40]-[41]).
6. Nor, strictly understood, was the claim in trespass able to be maintained (possession or the immediate right to possession being necessary for standing in a trespass to property claim). However, this difficulty as to standing appears only to have emerged (or been appreciated by the respondent) on the second day of the hearing (and it is the nub of the complaint the subject of the first of the grounds of appeal - see below). It is fair to say that this seems to be a product of the manner in which the claim was pleaded by the respondent (as a claim for "trespass to land" for malicious damage - see [41]; [43] of the second further amended technology and construction list statement), there being no reference to an action on the case in trespass for permanent injury to the respondent's reversionary interest; and the fact that the appellant did not in his list response raise any issue of standing in relation to the claim in trespass (simply asserting that he had not been on site at the development since February 2018 and otherwise denying the allegations at [41]-[45]) (see [14] of the list response) and articulating the issue as being whether he maliciously damaged the works and converted the materials, fixtures and fittings at the site the subject of the proceedings and, if so, what damages should be awarded (see at [B4] of the list response).

Appeal

1. By his amended notice of appeal filed on 10 August 2022, the appellant raised various grounds of appeal, only three now being pressed:

A. The discretion miscarried 1. There was a miscarriage of the exercise of the discretion of the trial judge when his Honour permitted the respondent to bring a cause of action based upon an action on the case in trespass ([46] to [48] of the Primary Judgment) in circumstances where: a. the trial judge did not apprehend that the respondent was seeking leave to run an alternative case in relation to the malicious damage that was not grounded upon the pleadings which had limited the causes of action to trespass and conversion (see [41] to [43] Second Further Amended Construction List Statement); b. the respondent had not sought leave to amend their pleadings; c. the trial judge did not order the respondent to amend its pleadings; d. the trial judge did not apprehend that the appellant had made a forensic decision not to adduce any evidence in relation to malicious damage including any evidence in relation to quantification of damages on the basis of a diminution in value of the reversionary interest ([51] of the Primary Judgment); e. the trial judge did not grant the appellant leave to adduce evidence in reply in circumstances where the appellant had not prepared any evidence in relation to loss of value of the reversionary interest; f. by reason of subparagraphs 1. [sic; presumably 'a'] to e. above, there was a denial of procedural fairness or natural justice.

B. Incorrect Measure of Damages 2. The trial judge erred in assessing damage to permanent injury to the reversionary interest on the basis of the cost of repair rather than a diminution in value to the reversionary interest ([54] of the Primary Judgment).

C. Error in Construction 3. The trial judge erred in construing "construction work" and "building work" in Part 4 of the Design and Building Practitioners Act 2020 (NSW) to include boarding houses ([118] and [119] of the Primary Judgment) in that, on a proper construction of the term "building work", boarding houses do not fall within the meaning of "building work".

Determination

1. As the respondent maintains that the appellant's ground 1 is dependent on ground 2 succeeding (that being the contention that the primary judge erred in assessing damages payable by the appellant by reference to the cost of repairing the damage that he caused, rather than by reference to the diminution in value of the respondent's interest in the Property) and the appellant appeared to concede that if ground 2 did not succeed then ground 1 would also fail (AT 1.25-28), it is convenient to deal first with ground 2.

Ground 2 - Assessment of damages for trespass on the case

1. The appellant's proposition in relation to ground 2 is that, in order to obtain the costs of rectification (on a claim for damages for permanent injury to the reversion) the respondent was required to prove that its desire to reinstate the Property was reasonable in the circumstances (the appellant citing Evans v Balog [1976] 1 NSWLR 36 (Evans) at 40 per Samuels JA, with whom Moffitt P and Hutley JA agreed; Gagner at [103]; Port Stephens Shire Council v Tellamist Pty Ltd (2004) 135 LGERA 98; [2004] NSWCA 353 at [199] per Santow JA, dissenting on the outcome; State of South Australia v Simionato [2005] SASC 412; (2005) 143 LGERA 128 at [92] per Besanko J (his Honour then sitting on the Supreme Court of South Australia) Debelle and Nyland JJ agreeing; and Hansen v Gloucester Developments Pty Limited [1992] 1 Qd R 14 (Hansen) at 15-17 per Williams J, Shepherdson J agreeing).
2. The appellant contends that the respondent was required to establish that it intended to reinstate the property and that the cost of restoration was not disproportionate to any diminution in value given the nature of the property.
3. As to the first, the appellant says that there was no evidence of the desire to reinstate the Property (referring to evidence as to the cessation of construction works in early 2018) and that a valuation obtained of the Property in March 2019 assessed the value on three separate bases, one of which was a sale in its current condition.
4. As to the second, the appellant says that there is no evidence of the value of the Property prior to it being damaged and that, without such evidence, it is impossible to determine whether the cost of restoration is disproportionate to any diminution in value given the nature of the Property.
5. The appellant's complaint is thus that the primary judge did not undertake the exercise that was required to be undertaken; in that his Honour had to be satisfied that the cost of rectification was reasonable in the circumstances and that, to be so satisfied his Honour needed to have evidence both that the respondent intended to reinstate the Property and that the diminution in value to the Property as a result of the damage was not disproportionate to the cost of cure (AT 2.40-47); the foundation of the appellant's argument being that the compensatory principle is qualified by a notion of reasonableness.

Ground 1 - Denial of procedural fairness or natural justice

1. Turning back to ground 1, the appellant in written submissions appeared to put this as a House v The King error, invoking the principles relating to challenges to the exercise of a discretion by reason (see House v The King (1936) 55 CLR 499; [1936] HCA 40 at 505 per Dixon, Evatt and McTiernan JJ); i.e., where the primary judge: acted on the wrong principle; allowed extraneous or irrelevant matters to guide or affect him or her; mistook the facts; or did not consider some material consideration. In his written submissions, the appellant submits that the discretion of the primary judge miscarried (in the House v The King sense) by allowing the respondent to run an unpleaded alternative case of an action on the case in trespass. In oral submissions, however, it was accepted that the complaint here is as to an error of law - that being a complaint as to a denial of procedural fairness.
2. The appellant says that (as is historically correct) an action on the case in trespass is a separate cause of action to trespass; and the appellant complains that the primary judge did not grapple with the appellant's submission that the damage to the reversionary interest is usually quantified by the diminution in value to the land rather than on the basis of the costs of rectification (the latter being a guide to, but not necessarily conclusive evidence of, the diminution in the value of the reversion). In this regard, the appellant refers to Edelman JE, McGregor on Damages (Sweet & Maxwell, 21st ed, 2020) at [39-043]; Hosking v Phillips (1848) 154 ER 801; (1848) 3 Exch 168 (Hosking); Cotterill v Hobby (1825) 107 ER 1133; (1825) 4 B&C 465 (Cotterill); Jones v Llanrwst at 404; Hanson v Newman [1934] Ch 298 at 319 to 320 and 322 to 323 per Denning LJ, Singleton and Bucknell LLJ agreeing at 328; Smiley v Townshend [1950] 2 KB 311; Jaquin v Holland [1960] 1 WLR 258 and Van Dal Footwear Ltd v Ryman Ltd [2010] 1 WLR 2015.
3. Insofar as the primary judge relied upon Joyner and the observations of Finkelstein and Gordon JJ in Bowen v Tabcorp at [9]-[10] as to the measure of damages for an action on the case in trespass (see at [53] of the primary judgment), the appellant says that the cost of rectification is only a guide for calculating the diminution in the value of the reversion; it is not conclusive (citing [7.900] of Edgeworth B, Butt's Land Law (Thomson Reuters, 7th ed, 2017) (Butt's Land Law) where reference is made to Graham v Markets Hotel Pty Ltd (1943) 67 CLR 567; [1943] HCA 8 at 583, 587, 595; Jones v Herxheimer [1950] 2 KB 106; Haviland v Long [1952] 2 QB 80) and will not always be the appropriate measure of damage to the reversion. The appellant refers in this regard to [7.900] of Butt's Land Law where the author says, in the context of damages for breach of a covenant to repair, that reinstatement damages are only awarded in a relatively narrow range of cases.

Ground 3 - Whether "building work" extends to boarding houses

1. I agree with Kirk JA and Griffiths AJA, for the reasons that their Honours have given, that ground 3 of the appeal should be rejected.

Orders

1. For the above reasons, I would have proposed that the appeal be allowed in part and the matter remitted to the Equity Division for re-hearing of the claim for damages for permanent injury to the respondent's reversionary interest in the Property the subject of this proceeding. Costs would have then fallen to be determined on the basis that the appellant was partly successful on the appeal. As it is, having regard to their Honours' contrary conclusions on grounds 1 and 2, an order for the dismissal of the appeal with costs is the appropriate order to be made.
2. KIRK JA and GRIFFITHS AJA: Mr Daniel Roberts, the appellant, is a builder who operated through a company, DSD Builders Pty Ltd, which is now in liquidation. The company contracted with Goodwin Street Developments Pty Ltd, the respondent, to construct three residential boarding houses intended for use as university student accommodation on land owned by Goodwin. Work was well advanced when the parties fell out. DSD did no further work on the site after 2 March 2018, immediately following a site meeting. On 19 March 2018 a representative of Goodwin attended the building site and observed that substantial deliberate damage had been done to the buildings and that numerous items - including doors, windows and stairs - had been removed. Goodwin terminated the building contract that day.
3. Goodwin sued Mr Roberts in the Supreme Court. It had initially sued DSD, but later joined Mr Roberts. The claim against the company was stayed automatically after it went into liquidation. Goodwin made two types of claim against Mr Roberts: 1. It sued him in tort with respect to the deliberate damage. The primary judge, Stevenson J, held that Mr Roberts had caused this damage. There was no dispute that the cost to repair the damage and replace the missing items was some $586,000. The respondent initially labelled the tort claim as a claim in trespass. The appellant submitted below that such a claim could not be made out in circumstances where, at the time of the damage, the owner did not have exclusive possession of the building site. The primary judge accepted that submission, but then accepted the respondent's fallback submission that its claim could be treated as an action on the case. On that basis his Honour upheld the claim for the rectification/reinstatement costs. 2. Goodwin sued Mr Roberts for a separate list of defects in the building work that had been undertaken. This claim was made pursuant to the statutory duty of care with respect to construction work arising under s 37 of the Design and Building Practitioners Act 2020 (NSW) (DBP Act). There was no dispute that the cost to rectify these defects was of the order of some $300,000.

Ground 2 - Assessment of damages for injury to the reversionary interest

1. As noted, the appellant does not dispute that the amount awarded by the primary judge correctly reflected the costs of making good the damage to the property that he was found to have caused. Nor does he dispute that Goodwin was entitled to claim damages on an action on the case for damage to its reversionary interest in the land even though it was not in exclusive possession of the land at the time the damage was done: note eg Rodrigues v Ufton (1894) 20 VLR 539 at 543-546. What he disputes is whether those rectification costs represented the proper measure of compensation.
2. The appellant contends that the primary judge failed to grapple with his submission that the damage to the reversionary interest is usually quantified by the diminution in value to the land, rather than on the basis of the cost of rectification. The appellant acknowledges that it is possible for the cost of rectification to be a guide to the diminution in the value of the reversion, but says the onus lies on the claimant to prove that awarding such an amount is reasonable, and that that involves showing both that the claimant actually intends to reinstate the property and that the cost of restoration is not disproportionate to any diminution in value. The appellant cites various authorities in support of these contentions.
3. On close examination, neither general principle nor the authorities cited by the appellant support his position. In the circumstances of the case there was an evidentiary onus on him to establish that awarding damages for the cost of reinstatement was unreasonable in all the circumstances. He did not discharge that onus. In any case, the evidence supports an inference that Goodwin intended to rectify the damage done to the buildings. We do not understand the respondent to have conceded that the appellant did not bear an evidential onus, although its submissions were not pellucidly clear on the point (for example, stating elliptically in address that "[w]hilst there may be an onus on the plaintiff to prove that it's reasonable to have the damages measured by reference to the cost of rectification, any question of unreasonableness is an onus on the defendant"). In any event, where the onus lay is a matter of law. Further, it was clear that the respondent submitted that insofar as there was any onus on it that onus was discharged on the evidence.

The reasons of the primary judge

1. Given their central importance to ground 2, it is desirable to set out in full the pertinent part of the primary judgment (footnotes omitted): 46 Although Goodwin did not have exclusive possession of the site at the time the damage was done to its property in March 2018, it was a reversioner by reason of the fact it would, in due course (whether because the works were completed or because it exercised entitlement to retake possession) become entitled to exclusive possession of its property. 47 In the circumstances that existed when the damage was done, Goodwin was in a position very shortly to obtain exclusive possession of the site and thus fall into possession of the reversion. It did so a number of days later, on 19 March 2018, when it terminated the building contract, and re-took possession. 48 A reversioner, including a lessor who has leased its property to a lessee, or an owner who has temporarily given another (such as a builder) exclusive possession of its property, is entitled to bring "an action on the case for trespass" or an action "of trespass on the case", if during that other person's possession of the property, a trespass occurs resulting in "permanent injury to the reversion", or that will "necessarily affect the reversioner's interest when the property falls into possession". 49 Permanent injury to the reversion in this context means "such as will continue indefinitely unless something is done to remove it". 50 The "injury" done on the site in this case was thus "permanent" in this sense. 51 Ms Chan [appearing for Mr Roberts] submitted that the measure of damages to permanent injury to the reversion is the diminution in the value of the reversionary interest and that she was not in a position to meet such a case. In any event, Goodwin had not adduced evidence of any diminution in value to its property. Rather, its evidence was directed to the cost of repair. 52 However, the fundamental objective of an award for damages in tort is to provide "that sum of money which will put the party who has been injured … in the same position as he would have been in had he not sustained the wrong for which he is now getting his compensation or reparation". 53 If, as here, the injured party is entitled to regain possession of the reversion shortly after the damage was done, the cost of repairs will better represent that "sum of money" than may be the case where the injured party is not able to retake possession for a lengthy period following the infliction of the damage. 54 I am satisfied that the appropriate measure of Goodwin's loss for the damage done to the property is the reasonable cost of repairing the damage. 55 As I have said, there is no controversy about what that reasonable cost is.

Applicable principles

1. The basal compensatory principle is well settled (Haines v Bendall (1991) 172 CLR 60 at 63; [1991] HCA 15; citations omitted): The settled principle governing the assessment of compensatory damages, whether in actions of tort or contract, is that the injured party should receive compensation in a sum which, so far as money can do, will put that party in the same position as he or she would have been in if the contract had been performed or the tort had not been committed.
2. There can be some differences in assessing such damages for contract and tort. For example, in contract it is relevant to take into account the fact that the parties have given consideration for the due performance of their respective contractual obligations and may have agreed in advance as to what is to occur in the event of a breach. However, the basic compensatory principle is the same for both.
3. In seeking to put the injured party in the same position account must be taken of what is reasonable. For example, in Arthur Robinson (Grafton) Pty Ltd v Carter (1968) 122 CLR 649; [1968] HCA 9, Barwick CJ said that: a compensation award "ought to be a fair and reasonable compensation for the injuries received" (at 656); this involves "moderation" and not "attempting a perfect compensation" (at 657); and the question "is not what are the ideal requirements but what are the reasonable requirements" of the injured person (at 661). In Chulcough v Holley (1968) 41 ALJR 336, at 338, Windeyer J said that a plaintiff "is only entitled to be recouped for such reasonable expenses as will reasonably be incurred as a result of the accident". And in Sharman v Evans (1977) 138 CLR 563, at 573; [1977] HCA 8, Gibbs and Stephen JJ referred to "[t]he touchstone of reasonableness". These statements are taken from personal injury cases but they manifest general principle.
4. The object of putting the claimant in the same position as if the wrong had not occurred may often "be achieved in different ways, and a proper assessment is determined by the circumstances of the case and by the overriding requirements of what is reasonable": Evans v Balog [1976] 1 NSWLR 36 at 39. In assessing what is reasonable compensation to the particular claimant the court must bear in mind "what he was, what he now is, and how he is likely to meet his [injury]": Arthur Robinson at 656 per Barwick CJ.

Cases and texts invoked by the appellant

1. The appellant invoked various cases - mainly from the United Kingdom - along with certain texts to seek to undermine the general principles distilled above. In deference to the appellant's argument these will be addressed in some detail. The appellant's attempt does not succeed in undermining the principles extracted from the cases just discussed.
2. The appellant sought to rely on [39-043] in JE Edelman, McGregor on Damages (21st ed, 2020, Sweet & Maxwell). Assuming that the appellant's reference to [39-043] is correct, it is difficult to see how that passage assists. It refers to two "modern" cases in which damage to a reversionary interest has been measured, but neither case advances the appellant's position. The first case is Abbahall Ltd v Smee [2003] 1 WLR 1472. There, the respondent failed to maintain the roof of her property (which also included the first and second floors of a building). This created the danger of masonry falling onto visitors and also resulted in water seeping into the ground floor premises which were owned by the appellant. The appellant had let the premises to a Mr Pattinson, who in turn had sublet it to another person. Upon the appellant commencing proceedings claiming that the respondent owed it a duty of care which entitled it to recover the whole of the cost of the repairs, the respondent disputed the claim inter alia on the basis that she owed no duty to the appellant because it was a mere reversioner. By the time the case came before the Court of Appeal, the respondent had accepted that she owed the appellant a duty of care and the only issue was the assessment of damages (the primary judge having ordered the respondent to pay only one quarter of the cost of the repairs). It does not appear to have been in dispute that the appropriate measure of damages in the case was the cost of repair. The Court made orders requiring both the appellant and respondent to each bear half of that cost. The case turned very much on its own facts.
3. The second case is Irontrain Investments Ltd v Ansari [2005] EWCA Civ 1681. It involved broadly similar circumstances to those in Abbahall. Irontrain Investments Ltd was the proprietor of premises on both the ground and upper floors of a building. Those premises were all let to other persons. Mr Ansari was the lessee of another flat in the building (Flat 3), situated on the second floor of the building. One of Irontrain Investments' flats on the ground floor (Flat 1) suffered water damage owing to two separate leaks in Mr Ansari's flat. A portion of Flat 1 was rendered uninhabitable. The lessee first withheld a portion of rent for a few months and then moved out entirely. Flat 1 was not rented out for approximately two years thereafter and, in the meantime, Irontrain Investments Ltd incurred expenditure in putting Flat 1 into a lettable condition. Irontrain Investments Ltd commenced proceedings against Mr Ansari, claiming damages on the alternative bases of breach of contract and tort both for lost rent and in respect of the expenditure incurred for repair works on Flat 1. Subject to some minor modifications to the primary judge's allowance for damages under both these heads, the Court of Appeal upheld the award of damages in both respects.

Application of principles in this matter

1. In the particular circumstances of this case, the issue ultimately turns on which party carried the evidentiary onus below in relation to the issue of whether the cost of rectification was the appropriate measure of damages. The parties were unable to direct the Court's attention to any authorities which are directly in point on this question. We have referred above to authorities which support the conclusion, both in contract and tort settings, that the party who disputes the reasonableness of an award of damages based on the cost of reinstatement or repair in a case such as the present carries an evidentiary onus.
2. Consistently with that view, there are several features of the circumstances of this case which point to Mr Roberts bearing an evidentiary onus if he wished to displace the plaintiff's claim for damages based upon the costs of rectification. It is significant that, in this case, the respondent made clear in its Second Further Amended Technology and Construction List Statement (Statement) that it sought against Mr Roberts the cost of rectifying the damage he did to the Property and the cost of replacing the converted materials, fixtures and fittings. Implicitly, the plaintiff asserted that this was the reasonable measure of damages in the particular circumstances. If Mr Roberts wished to contest that assertion, he needed to take appropriate steps, including by raising the issue in his Technology and Construction List Response (Response) and, if appropriate, adducing evidence in support of his position. He failed to take either of these steps. Indeed, in [4] of his Response Mr Roberts said that if he maliciously damaged the Property (which he denied), an issue would then arise as to "what damages should be awarded in connection with that conduct". If Mr Roberts' position was that the appropriate measure of damages was diminution in value and not rectification costs as sought by the plaintiff, he should have said so and taken appropriate steps in support of his position. His failure to do so is not excused by the fact that elsewhere in the Statement the plaintiff described its claim against Mr Roberts as being (relevantly) "in trespass to land".
3. Nor was the matter adequately raised by Mr Roberts in his written submissions below. Mr Roberts' pre-hearing outline of submissions dated 6 April 2022 were silent on the appropriate measure of damages. The Statement of Issues which was annexed to that outline effectively repeated Mr Roberts' Response. It identified as an issue whether Mr Roberts maliciously damaged the Property and, if so (which he denied), "what damages should be awarded in connection with that conduct".

Ground 1 - Denial of procedural fairness

1. Counsel for Mr Roberts stated at the outset of her opening address on the appeal that if Mr Roberts failed on ground 2, he would necessarily fail on ground 1. That concession should be accepted.
2. For completeness, however, it is desirable to explain why ground 1 should independently be rejected. This is because, on one view, the claim of procedural unfairness turns not only on the issue of the appropriate measure of damages, but also on an issue arising from the plaintiff's description in its Statement of its claim against Mr Roberts relevantly being for "trespass to land" and not an action on the case.
3. In order to demonstrate why there was no procedural unfairness, it is necessary to describe at a little length how these issues emerged in the proceeding below. The trial was conducted on the basis of Technology and Construction List Statements and Responses as opposed to formal pleadings. Ward P has set out relevant caselaw at [62]-[65] which stands for the proposition that, while such statements and responses differ in substance, they nevertheless stand in the place of pleadings in the present proceedings. Regard must also be had to other relevant circumstances affecting the conduct of a particular trial in the Technology and Construction List.
4. The respondent's case against the appellant was expressly said in its Statement to be based on trespass and conversion (with the latter dropped at the hearing). The respondent claimed in the Statement that Mr Roberts was liable to it "in trespass to land". It was stated at [45] of the Statement that the claim for damages was for the cost of rectification and replacing the materials maliciously damaged or stolen (ie not diminution in value).
5. As noted above, in his Response, the appellant denied that he maliciously damaged the Property and said that there was an issue as to "what damages should be awarded in connection with that conduct" if his denial was not accepted. No issue of the respondent's standing to claim in trespass was raised in the Response. Mr Roberts effectively denied the allegations against him.
6. We have summarised above at [147]-[149] how the relevant issues were dealt with in the parties' pre-hearing written submissions and their closing written submissions. It is necessary then to describe how the issues arose in closing oral addresses below.

Ground 3 - Whether "building work" extends to boarding houses

1. Ground 3 of the amended notice of appeal suggests that the primary judge erred in construing "construction work" and "building work" in s 36, within Pt 4 of the DBP Act, as including boarding houses. The appellant contends that boarding houses do not fall within the phrase "building work", properly construed.
2. The primary judge aptly described s 36 as a "labyrinthine provision", adding that it appeared to have been drafted so as to make comprehension of it as difficult as possible (at [101]). That complexity reflects the parliamentary history of the DBP Act, which it is necessary to examine in some detail.
3. In our view the conclusion of the primary judge was correct, although our reasons and construction differ somewhat from his Honour's. This ground should thus be rejected.
4. In what follows we address the following: 1. the key provisions and the competing constructions; 2. the legislative history of the relevant provisions and the mischief to which Pt 4 of the DBP Act was directed; 3. relevant principles of construction; 4. the proper construction of ss 36 and 37.

The key provisions and the competing constructions

1. Part 4 of the DBP Act is headed "Duty of care". There have been no amendments to the relevant provisions since its enactment, save to change references to the Community Land Management Act 1989 (NSW) to the 2021 replacement Act of the same name.
2. Pursuant to s 2 of the DBP Act, Pt 4 commenced operation immediately on assent being given to the Act, which occurred on 10 June 2020. So did Pt 1, which contains the definition provisions of the Act. However, s 2 provided that other key parts of the Act would not commence until 1 July 2021, and other aspects on a day appointed by proclamation. The regulations accompanying the Act, the Design and Building Practitioners Regulation 2021 (NSW), was not published until 9 April 2021, commencing operation on 1 July 2021 (pursuant to cl 2). Parts 1 and 4 of the Act thus commenced over a year before the regulations, and significant other parts of the Act, commenced.
3. The operative provision in Pt 4 is s 37, which imposes the statutory duty of care. Importantly, Pt 4 of the Act has retrospective operation, pursuant to cl 5 of Sch 1 of the Act. It extends to construction work carried out before the commencement of the Part as if the statutory duty of care was owed by the person who carried out the construction work to the owner of the land and to subsequent owners when the construction work was carried out. That retrospective operation is subject to the limit that the economic loss in question must first became apparent within the 10 years immediately before the commencement of s 37, or on or after the commencement of that section.
4. The significance of s 36 lies in the definitions therein which inform the proper construction of s 37. Those provisions, which are at the heart of the appeal on this ground, provide as follows: 36 Definitions (1) In this Part - association means an association within the meaning of the Community Land Management Act 2021. building has the same meaning as it has in the Environmental Planning and Assessment Act 1979. building product has the same meaning as in the Building Products (Safety) Act 2017. building work includes residential building work within the meaning of the Home Building Act 1989. construction work means any of the following - (a) building work, (b) the preparation of regulated designs and other designs for building work, (c) the manufacture or supply of a building product used for building work, (d) supervising, coordinating, project managing or otherwise having substantive control over the carrying out of any work referred to in paragraph (a), (b) or (c). owner of land means any of the following - (a) every person who jointly or severally or at law or in equity is entitled to the land for an estate of freehold, (b) for a lot within a strata scheme, the owner of a lot within the meaning of the Strata Schemes Management Act 2015, (c) for a development lot or neighbourhood lot within a community scheme, the proprietor in relation to the lot within the meaning of the Community Land Management Act 2021, (d) every person who jointly or severally or at law or in equity is entitled to receive, or receives, or if the land were let to a tenant would receive, the rents and profits of the land, whether as beneficial owner, trustee, mortgagee in possession or otherwise, (e) other persons prescribed by the regulations for the purposes of this definition. owners corporation means an owners corporation constituted under the Strata Schemes Management Act 2015. (2) In this Part, a reference to building work applies only to building work relating to a building within the meaning of this Part. (3) In this Part, a reference to the owner of land includes - (a) if the land is subject to a strata scheme under the Strata Schemes Management Act 2015, the owners corporation constituted for the scheme, or (b) if the land is subject to a community scheme, precinct scheme or neighbourhood scheme within the meaning of the Community Land Management Act 2021, the association for the scheme. (4) In this Part, a reference to a person who carries out construction work includes a reference to a person who manufactures, or is a supplier (within the meaning of the Building Products (Safety) Act 2017) of, a building product used for building work. (5) The regulations may - (a) prescribe additional work that is construction work for the purposes of this Part, and (b) exclude work from being construction work for the purposes of this Part. (6) The regulations may exclude persons from being owners for the purposes of this Part. 37 Extension of duty of care (1) A person who carries out construction work has a duty to exercise reasonable care to avoid economic loss caused by defects - (a) in or related to a building for which the work is done, and (b) arising from the construction work. (2) The duty of care is owed to each owner of the land in relation to which the construction work is carried out and to each subsequent owner of the land. (3) A person to whom the duty of care is owed is entitled to damages for the breach of the duty as if the duty were a duty established by the common law. (4) The duty of care is owed to an owner whether or not the construction work was carried out - (a) under a contract or other arrangement entered into with the owner or another person, or (b) otherwise than under a contract or arrangement.

The legislative history and the relevant mischief to which Pt 4 is directed

1. The DBP Act was enacted in part as a response to a February 2018 report, commissioned by the "Building Ministers' Forum", by Professor Peter Shergold and Ms Bronwyn Weir, entitled "Building Confidence - Improving the effectiveness of compliance and enforcement systems for the building and construction industry across Australia". As the Minister's second reading speech in the Legislative Assembly acknowledged, the legislation was enacted in the context of broader public concerns about building defects highlighted by, for example, the much publicised cases of widespread and serious defects in the Mascot Towers and Opal Tower buildings in Sydney. The DBP Act sought to address some of the problems by requiring various design and building practitioners (including engineers) to be registered and to comply with various regulatory requirements.
2. It is also apparent from the debates in the Legislative Council, and from the Minister's speech in the Legislative Assembly when the Bill was returned there after amendment in the Legislative Council, that Pt 4 of the Act specifically sought to overturn the effect of the High Court's decision in Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 (2014) 254 CLR 185; [2014] HCA 36: see Legislative Council Hansard, 2 June 2020 per Mr David Shoebridge MLC at 64-65, per the Minister for Finance and Small Business, the Hon Damien Tudehope at 66, and per the Hon Adam Searle MLC at 66; see also Legislative Assembly Hansard, 3 June 2020 per the Minister for Better Regulation and Innovation, Mr Kevin Anderson at 2331. The High Court held in Brookfield that the builder of strata-titled serviced apartments owed a duty of care to the registered proprietor and property developer, but not to the respondent owners corporation. In brief, the effect of the decision was that a builder's duty of care to avoid economic loss resulting from latent defects in a property stopped with the first purchaser, absent special cases involving vulnerability (such as a plaintiff's incapacity or limited capacity to protect itself from economic loss arising from a builder's conduct).
3. The legislative history of the Act is complicated. The DBP Bill was introduced into the Legislative Assembly on 23 October 2019 by Mr Anderson, the Minister for Better Regulation and Innovation. Provisions relating to the proposed statutory duty of care were set out in Pt 3 of the first print of the DBP Bill. It was not originally proposed that the Part would have retrospective operation. The proposed duty of care was imposed by cl 30, while various relevant definitions were set out in cl 29, as follows: 29 Definitions (1) In this Part - … building means a building of a class or type prescribed by the regulations. construction work means building work and the preparation of regulated designs and other designs for building work. … (2) In this Part, a reference to building work applies only to building work relating to a building within the meaning of this Part. … (4) The regulations may - (a) prescribe additional work that is construction work for the purposes of this Part, and (b) exclude work from being construction work for the purposes of this Part. … 30 Extension of duty of care (1) A person who carries out construction work has a duty to exercise reasonable care to avoid economic loss caused by defects - (a) in or related to a building for which the work is done, and (b) arising from the construction work. (2) The duty of care is owed to each owner of the land in relation to which the construction work is carried out and to each subsequent owner of the land. …

Relevant principles of construction

1. There was little dispute about the principles of statutory construction to be applied here. The parties accepted that the Court was required to focus on the text, construed in context and taking account of the relevant purpose sought to be achieved: see eg Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27; [2009] HCA 41 at [47]; R v A2 (2019) 269 CLR 507; [2019] HCA 35 at [32]-[37].
2. Sections 33 and 34 of the Interpretation Act 1987 (NSW) are pertinent. The former provision states that, in interpreting a statutory provision, a construction that would promote the purpose or object underlying the Act (whether that purpose is explicit or implicit) shall be preferred to a construction that would not promote that purpose or object. The general effect of the latter provision is to permit the Court to refer to some extrinsic materials in ascertaining the purpose or object underlying an Act and then to confirm that the ordinary meaning of the text was intended. However, s 34 does not permit resort to such materials for the purpose of departing from the ordinary meaning of the text unless either the meaning of the provision to be construed is ambiguous or obscure or in its ordinary meaning leads to a result that is manifestly absurd or unreasonable: see Re Australian Federation of Construction Contractors; Ex parte Billing (1986) 68 ALR 416 at 420; [1986] HCA 74. Unsurprisingly, the parties did not dispute that the meaning of ss 36 or 37 of the DBP Act was ambiguous on the issue at hand.
3. The Court should also be mindful of the following observations in Saeed v Minister for Immigration and Citizenship (2010) 241 CLR 252; [2010] HCA 23 at [31] per French CJ, Gummow, Hayne, Crennan and Kiefel JJ: Statements as to legislative intention made in explanatory memoranda or by Ministers, however clear or emphatic, cannot overcome the need to carefully consider the words of the statute to ascertain its meaning.
4. The appellant gave some emphasis to that principle. The importance of not losing sight of the text must constantly be borne in mind. But it does not mean that courts ignore extrinsic materials, nor that they do not take account of the mischief to which the provisions in question were addressed. That point was made by Kiefel CJ and Keane J in R v A2, just after having referred to Alcan and Saeed amongst other cases (footnotes omitted): [36] These cases serve to remind that the text of a statute is important, for it contains the words being construed, and that a very general purpose may not detract from the meaning of those words. As always with statutory construction, much depends upon the terms of the particular statute and what may be drawn from the context for and purpose of the provision. [37] None of these cases suggest a return to a literal approach to construction. They do not suggest that the text should not be read in context and by reference to the mischief to which the provision is directed. They do not deny the possibility, adverted to in CIC Insurance Ltd v Bankstown Football Club Ltd, that in a particular case, "if the apparently plain words of a provision are read in the light of the mischief which the statute was designed to overcome and of the objects of the legislation, they may wear a very different appearance". When a literal meaning of words in a statute does not conform to the evident purpose or policy of the particular provision, it is entirely appropriate for the courts to depart from the literal meaning. A construction which promotes the purpose of a statute is to be preferred.

Sections 36 and 37 of the DBP Act construed

1. The central issue that divides the parties is what types of buildings are subject to the statutory duty of care provided for in Pt 4. That issue depends on whether and, if so, how the general definition of "building work" in s 4(1) of the Act applies having regard to the further specific definition of that notion in s 36(1). The primary judge considered that the general definition did not apply at all. In all the circumstances that is a reasonably open construction. However, in our view it is not the construction which best reflects the applicable principles of construction and resolves the tensions within the Act.
2. His Honour thought it significant (at [113]) that different Parts of the DBP Act commenced at different times, and he considered that the statutory regime only operated coherently if the s 4 definition of "building work" applies to those Parts of the DBP Act which commenced on 1 July 2021 (ie Pts 2, 3, 5-9) and not to Pt 4, which commenced on 10 June 2020 with retrospective operation (as did Pt 1). There is some force to this point. It is notable that Pt 4 commenced immediately, whereas the definition of "building work" in s 4(1) could not operate of itself until a regulation was made to identify the types of building to which it applied. The regulations were not in fact made until some time later, and it may be inferred that, at the least, it was understood that a delay in making the regulations was a real possibility. In the Minister's original second reading speech in the Legislative Assembly he referred to the fact that the regulations had not been finalised (as quoted above at [200]).
3. However, any delay in making the regulations would not deprive the definition of "building work" of all practical effect in the context of Pt 4. That is so because given that the further definition of "building work" in s 36(1) states that that notion, in Pt 4, includes residential building work within the meaning of the Home Building Act, there was at least some content provided for the term in s 4 (for the purposes of Pt 4 only) regardless of when the regulations were made. Regardless of when the regulations were made, "building work" for the purposes of Pt 4 included, from the beginning, residential building work within the meaning of the Home Building Act.
4. Nevertheless, it creates uncertainty for any provision to have immediate effect but with only partially delineated content, let alone one which applies with retrospective effect. The content was only partially delineated because, beyond the inclusive reference to the definition in the Home Building Act, it remained to be filled out by the regulations. It is relevant to take account of what the reasonable expectations of the public would be with respect to the extent of retrospective operation of a law: see Stephens v The Queen (2022) 96 ALJR 871; [2022] HCA 31 at [33]. Here, those reasonable expectations favour a construction promoting greater certainty in the application of Pt 4. Complete certainty is not possible, because on any view the regulations may affect the scope of the work to which Pt 4 applies. That is so because s 36(5) of the DBP Act provides that the regulations may add or subtract to the type of work that is included as "construction work" for the purposes of the Part. It is that term of "construction work" which is the subject of the statutory duty in s 37. Even so, although complete certainty is not possible, it remains the case that one relevant construction factor is to increase certainty. Here, that militates against the construction supported by the appellant to the effect that the statutory definition of "building work" in s 4(1) applies without qualification to the further definition of that term in s 36(1), because that leaves the scope of the buildings to which Pt 4 applies substantially at large, save for the extent to which the definition of residential building work in the Home Building Act applies.

Conclusion

1. None of the three grounds of appeal have been made out. The appeal should be dismissed, with costs.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 10 February 2023